Speech:
Dr Thomas Sedran
Chairman of the Brand Board of Management of Volkswagen Commercial Vehicles
Good morning, Ladies and Gentlemen,
I too would like to wish you a warm welcome to the Annual Press Conference of Volkswagen Commercial Vehicles.
It gives me great pleasure to greet you from this unusual location today: inside the Project Centre for Mobile Online Services – or MOD for short. Here on an area of 850 square metres, some 60 talented staff are working through an agile and cross-disciplinary approach to develop digital products connected with our business. The MOD therefore stands symbolically for the transformation of VWCV and for the subject that we wish to discuss with you today.
We are concerned with the triad of new strategy, new business fields and new products.
We are directing our actions towards the fundamental changes in our industry and to the changing requirements of our customers. We have a clear strategy for our future business. Our aim is to shape the transformation at the top of our industry. And we can do that because we are financially strong. The figures for the very good business year of 2018 demonstrate this:
In 2018, VWCV achieved the second-best result in its history.
Deliveries were slightly above the previous year – and this was despite the difficult environment in some markets. In total, we delivered some 500,000 vehicles to customers, once again slightly more than in the previous year. Europe and South America were particularly strong here. There was a significant decline in the Middle East, above all because of the difficult market environment in Turkey.
The good sales result is reflected in the financial figures: sales at EUR 11.9 billion were approximately at the previous year's level. The burden on the operating profit has come above all from WTLP, negative exchange rate effects and the bringing forward of development costs, such as that for the ID. BUZZ. Nevertheless, the profit at the end was EUR 780 million. Operating return on sales was just over 6.6%. That is a respectable figure when viewed against the competitive backdrop.
Overall, then it was a very successful business year. It is the result of a strong team performance. I wish to thank all employees most sincerely for this result. My thank you also goes out to our dealers. And not least to our customers, who have again remained faithful to our brand and our products during 2018.
Ladies and gentlemen,
Together with the entire industry, we are standing before the greatest transformation in our history: electric mobility, digitalisation, autonomous driving as well as new mobility and transport systems. These are the topics that concern us.
We are committed to the target of the Paris Summit on Climate Protection of restricting global warming to below two degrees. We face the task of shaping mobility in a cleaner, safer and more efficient way with our vehicles and services. As a manufacturer of light commercial vehicles, we possess an important lever for changing urban traffic in connection with goods and services. Together with our customers, we are advancing the transformation towards "Zero-Emission" mobility.
There is no doubt that, when considering climate protection, we need a rapid conversion to alternative drives. Electric mobility plays a crucial role here, especially for passenger cars. For urban delivery transport with low mileage, too, battery-powered electric drives are the means of choice.
In the case of larger and heavier vehicles though – especially when they cover longer distances – the results look somewhat more varied: here, for example, synthetic diesel fuels from regenerative energy sources represent a very wise interim solution. The same is true of hybrid drives, which we will be offering for the future T7, for example. In the long run, we shall also continue pursuing the fuel cell drive, because for our large vehicles, in particular, it is an efficient, ecological and extremely useful technology.
In any case, I find it pleasing to see that an intensive discussion is now taking place in Germany on how we wish to shape the change in mobility in a climate-friendly and socially acceptable manner. Attractive and affordable products are a very essential factor in this discussion. However, it is just as important to have a reliable infrastructure with sufficient charging facilities, in the cities and along the motorways. And a legal and fiscal framework that promotes electric mobility effectively and in sufficient breadth.
Above all, we have to consider the switchover in traffic and energy in an integrated manner. While electric cars are driving on coal-generated power, nothing is being achieved for the climate – in fact quite the opposite is true. This is not something that one industry and one company alone can accomplish. I am convinced that we need a common, social and political effort.
The response to all of these challenges is our strategy GRIP 2025+. We have a clear plan for VWCV: we are designing the necessary transformation and securing the long-term success of our brand. "We transport success!" – today and in the future as well.
In this respect, 2019 will be a crucial year for VWCV. For us it will be a year of moving to a new era.
The focus of our strategy is directed towards three business fields:
- perfect offers for cost-conscious commercial customers
- emotional vehicles for leisure and family
- innovative mobility and transport services
What does this mean now in concrete terms?
Firstly: we are one of the leading manufacturers of light commercial vehicles in Europe today. And we wish to remain so as well.
Together with Ford, our most important competitor and new cooperation partner, we will be further expanding this position. As a result, we are increasing our profitability and securing the capacity utilisation of our plants in the long term. VWCV and Ford complement each other ideally in their regional strengths and products. Ford, for example, is very strong in North America. VWCV in its home market of Europe.
In future, we will be pooling our purchasing, development and production capacities. This will place us in a better position to serve the different customer needs – we will produce greater volume, thus achieving economies of scale and saving costs. We are opening up new markets with new, jointly developed products around the world – in this way, we will remain competitive and create growth opportunities.
At the same time, we have made a conscious decision to organise contractual negotiations along specific projects: this gives us the opportunity to arrive at initial results quickly. The first contracts have been concluded: the "Framework agreement for general cooperation" and the "Development agreement for the pickup" for the successor to the Amarok. Further steps are to follow in 2019. Transporters for commercial customers may well be among them as may a joint city van.
Secondly: we will continue to build premium vehicles for leisure and family. Through this we are retaining an important traditional line of our business. We are already extremely successful here with Multivan, Caddy Beach and California. And this is where we are growing profitably. These emotional and highly sought-after products remain an important brand core of VWCV.
I shall be going into a little more detail slightly later on what we have included in our product plans for the short and medium term.
Thirdly and finally, and this is perhaps the largest and most extensive step of our transformation: we are expanding our current business model beyond the vehicle itself. We will become a mobility provider. The keywords are: "Mobility as a Service" (MaaS) and "Transport as a Service" (TaaS). Behind these terms are new mobility and transport services with which we will earn money in the years ahead.
In future, we will be offering services along the complete value added chain: from the connected car, via mobile online services through to the deployable autonomous vehicle – as a robo-taxi over the last mile, for example. To this end, we at VWCV are pooling the Group-wide development for autonomous driving. Our new Member of the Board of Management for Technical Development, Alexander Hitzinger, has taken on this assignment for the entire Volkswagen Group.
In addition, we are engaged in fruitful discussions concerning an involvement in Argo, Ford's subsidiary for autonomous driving. Also conceivable is a joint company offering "Mobility as a Service" in the USA, Europe and other regions of the world. For many, though, autonomous driving is still a vision for the future. Yet, as you see, here too we are not waiting but making a start!
MOIA, the mobility services provider from Volkswagen, is already reality today: operations in Hannover are currently running successfully, with registered customers now numbering 70,000. MOIA is also set to start in Hamburg, with the launch scheduled for 15 April. The scheme will use specially developed shuttle buses based on the Crafter and produced in Osnabrück: they are fully electric and extremely comfortable. In future, the responsibility for all "MaaS" and "TaaS" activities in the Group will lie with VWCV. We are exploiting the know-how of our colleagues from MOIA in this field. However, MOIA will continue to be a separate company.
As I've already mentioned: despite all the important focus on the future topics mentioned, emotional vehicles remain the heart of VWCV – and will continue to account for the majority of our business for a long time to come.
A key feature of the brand’s success here is the flexible expansion of the range, as soon as customer requirements change. In the coming years, too, we will also be offering a broad range of vehicles for very different needs: this extends from the successor to the Amarok, already mentioned, via a new Caddy, to the Crafter. Each adapted to our customers' wishes and always up to date in terms of their technology.
Our CARGO e-bike will soon be joining our range for the last mile! It is already generating a great deal of attention at trade fairs and events. Now the team is preparing for the market launch in autumn.
The core of the brand is and remains our T series. And for this reason, I conclude with a few sentences on the future of our icon: we are facing the challenge that the demands made on our globally deployed transporter are very different. As mentioned, climate protection and electrification play a crucial role in this. Above all in Europe. At the same time commercial customers have very different needs to private customers, in terms of the costs, the drive unit, the equipment and comfort. This is why in the medium term, we shall organise the series into at least three model lines. In a very similar way, for example, to how Apple manages the iPhone, where a device is available for every demand, from "budget" to "premium".
On the one hand, this is the T6.1 – the Economical.
We unveiled the latest version of our icon a few weeks ago in Geneva. A reliable all-rounder. With many assistance and safety systems that are now being included in the Transporter for the first time. Permanently online, with new digital instruments and a new infotainment generation. And simultaneously at economical prices that are especially important for our cost-driven business and commercial customers.
Then, appearing as from 2021 will be the new T7 – the Progressive.
The architecture of the completely redesigned T7 will make it possible, firstly, to offer modern, efficient petrol and diesel engines, but also to electrify the vehicle. Plug-in hybrid is the keyword here.
The T7 is aimed at private people who consciously wish to take advantage of the latest development in drive technology, and therefore wish to cover long distances cost-effectively and sustainably, but also want to produce the lowest possible emissions when travelling in urban areas. The T7 is the ultimate Multivan. Made for everyone who focuses attention on leisure and the family.
And finally – from 2022: ID. BUZZ and ID. BUZZ CARGO. Probably the most important product of the coming years.
The ID. BUZZ is the fully electric and emission-free version of the legendary T series. The 'Bulli' for the electric age – and the most visible sign of the systematic route VWCV is pursuing to achieve sustainable and emission-free mobility. Our goal is that from 2025, around 80 per cent of our vehicles should be electrified.
Depending on the model option, the ID. BUZZ will be able to convey people or goods. Combined with ultra-modern digital technology, it will also serve as a future base for autonomous driving.
This is all combined with a design that quite consciously recalls the roots of our brand, our T1. For me, it is the symbol for the future of the brand: extremely utilitarian, extremely innovative and, at the same time: extremely sexy! "Love is back!"
As you see, we are launching a great offensive with our models.
In the year 2019 alone, we will be investing more than EUR 1.8 billion: in the development of new vehicles – with a major focus on electric drives. But also in the conversion of our plants. And for establishing new business fields. This is the most ambitious transformation programme in the history of the VWCV brand.
Hannover will become our showcase plant for electric mobility: The future of the Hannover location is thus secured. The site is and will remain the headquarters of our brand. The most important product and symbol of our transformation is the ID. BUZZ, which we will be building here in Stöcken as from 2022. Hannover will therefore remain the home of the 'Bulli'.
However, since no one is capable of predicting how quickly customers will accept our electric vehicles, we shall retain a high degree of flexibility in the Hannover plant over the coming years.
We are preparing for the production of battery-powered cars. At the same time, we will also continue building Multivans with combustion engines and as plug-in hybrids as well. We can react as quickly as is necessary to service customer requests and demand and to secure capacity utilization.
One thing is certain: the plant will change on its way into the electric era – and so too will the workforce. But we will be designing this conversion in a socially responsible manner, following the demographic curve. We have concluded what must be a unique agreement between company management and employee representatives. That means: no compulsory redundancies until the end of 2028! We are thus securing employment in Hannover in the long term. And we will make the workforce fit for its future tasks.
Ladies and Gentlemen, I now come to the conclusion.
We have a firm plan for the future of VWCV. We have set the right course and are significantly raising the pace of the transformation.
We are changing to become a supplier of sustainable mobility solutions – and are thus securing the future of the brand. We are establishing the conditions required at all levels to secure and expand our competitive position in the long term. In doing so, we are benefiting from cooperation arrangements with strong partners.
And last but not least, we have future-viable products with which we can inspire our customers both today and tomorrow.
In short: we are on the offensive. With a new strategy, new vehicles and new business models.
Thank you very much!
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